This post sheds light on how India managed to Import More crude oil in September 2023 as compared to Sept 2022 but for lower total cost.
Amid the escalating turmoil in West Asia, India finds itself navigating the precarious waters of the global oil market. The ongoing conflict in the region, epitomized by Israel’s recent ground offensive, raises concerns about potential supply disruptions that could send shockwaves throughout the world. West Asia is home to some of the globe’s most significant oil-producing nations, making any upswing in regional conflict a harbinger of soaring global oil prices. The recent oil price trends are already indicative of this volatility.
India, much like many nations, is heavily reliant on oil imports from West Asia. In fact, four of the world’s top ten oil-exporting countries are situated in the region, putting India’s energy security at risk should conflict further disrupt oil supplies.
To mitigate this vulnerability, India is wisely exploring alternative oil sources. Among the promising options is Venezuela, a South American nation renowned for its vast oil reserves. However, over recent years, political upheaval and strained international relations have hindered India’s oil trade with Venezuela.
In 2019, the United States imposed sanctions on Venezuela, disrupting India’s oil imports. Previously, 5 to 7 percent of India’s crude imports came from Venezuela. The American sanctions not only halted this trade but also adversely impacted Indian public sector companies that had investments in Venezuelan oil fields. These companies faced not only the denial of oil supplies but also the inability to collect outstanding debts due to the sanctions.
In a positive turn of events, these sanctions were recently lifted, enabling Venezuela to once again sell oil on the global market. India is eager to resume its oil trade with Venezuela, particularly considering the prospect of heavily discounted prices. This strategic move allows India to both diversify its sources of oil and reduce costs.
Additionally, India has displayed prudence in the oil market by diversifying its suppliers. One noteworthy shift is the increased oil imports from Russia, which has now become India’s largest oil supplier. This transition comes in response to the ongoing Ukraine conflict, necessitating a shift away from traditional West Asian suppliers.
As per data presented by Petroleum Planning & Analysis Cell, Govt of India crude oil imports in the month of September 2023 have increased by 3.89% but overall import cost has gone significantly down for the same time period.
|Crude Oil (‘000 Metric tonnes)|
|Import Cost of Crude oil (Rs crore)|
India’s proactive steps to safeguard its oil supplies and reduce reliance on West Asia represent a strategic approach to navigate the volatile global oil market. By employing diplomatic strategies like engaging with Venezuela and strengthening its collaboration with Russia, India not only mitigates the risk of oil supply disruptions but also fortifies its position as a resilient global energy player.
Despite higher oil prices compared to the previous year, India’s import costs have decreased. This demonstrates India’s ability to purchase more oil at a lower overall cost, thanks to its evolving partnerships with oil-rich nations.
The provided charts show a comparison of crude oil import costs and quantities between 2022 and 2023, highlighting India’s evolving oil import trends
In summary, India’s journey to secure its energy needs unfolds as a saga of prudent strategies and resourceful alliances, transcending the challenges presented by the ever-volatile West Asian region. As India fortifies its energy security, it safeguards its economy and strengthens its standing on the global stage.
Disclaimer: This post is intended solely for educational purposes. The securities mentioned are for illustrative purposes and not indicative of recommendations. It is based on information gathered from various secondary sources and is subject to change. Consult with a financial expert before making investment decisions.